Zora, a social media platform built on blockchain technology, recently launched its token on the Base chain, igniting discussions within the crypto community. The platform, co-founded by former Coinbase employees Jacob Horne and Tyson Battistella, allows creators to tokenize their content, enabling them to directly benefit from user engagement. Zora promises a strong growth story, claiming more than 400,000 creators and 2 million users. Its token distribution strategy has drawn significant pushback, which has pushed the platform’s innovative new approach to creator monetization into the background. The controversy centers around the significant allocation of tokens to the team and the perceived minimal airdrop for community members.
Zora, which functions similarly to Instagram, lets creators tokenize their content and earn directly from the trading activity their work generates. The company’s move to combat fraud comes as the platform has seen a massive influx of users, including 400,000 creators and 2 million collectors. So far, more than 1,500 NFTs have been minted on the Zora platform. Zora raised $62.6 million in 2022, propelled by support from major investors such as Coinbase Ventures, Paradigm, Kindred, and Haun Ventures. This funding increased the firm’s valuation to an astonishing $600 million.
Token Allocation and Community Concerns
Another huge sticking point is Zora’s tokenomics which has 65% of the tokens allocated to the team. Naturally, the community was concerned about this extreme allocation. This has a lot of members skittish about the new concentration of power, and fear of insider control is palpable. The decision to allocate such a large portion of tokens to insiders has fueled a debate about fairness and equitable distribution within the Zora ecosystem.
The community had a lot to say about the airdrop distribution too. Zora’s airdrop felt insufficient to a lot of users—with insiders having received a large allocation. In short, active users feel the imbalance that has produced the current dissatisfaction. They argue that their contributions to the platform are being undervalued, or worse, they’re being taken for granted.
Zora’s token vesting schedule has a six-month cliff with a 48-month vesting thereafter. The team’s tokens are set to unlock over four years in a staggered schedule. This occurs only after an initial six-month lock-up period. Though this is typical practice to help ensure a long-term commitment, the community is understandably cautious with such a large first-year allocation.
Network Growth and Market Impact
For all the drama around the botched airdrop distribution, Zora has technically seen steady network growth. Since the beginning of April, the platform has seen a steady increase in daily network activity, indicating continued user engagement and adoption. This growth suggests that the underlying technology and concept behind Zora resonate with creators and collectors, even amidst concerns about tokenomics.
Zora recently launched its token on the Base chain, a Layer 2 scaling solution for Ethereum. Base’s goal is to create a safe, low-cost, developer-friendly home for decentralized applications. Choosing Base as the launch platform aligns with Zora's goal of providing accessible and efficient tools for creators to monetize their work.
How smoothly Zora’s upcoming launch of a token goes and how the market eventually values that token are sure to be watched by industry observers with great interest. The project’s success is largely based on their ability to alleviate community fears regarding token distribution. It also needs to prove the long-term value of its platform. Zora’s success or failure may have ramifications for other social media platforms looking to add blockchain technology and tokenization into the mix.
Future Outlook for Zora
We’re inspired by Zora’s mission to lead the innovation of what’s next. Simultaneously, it needs to create community trust and guarantee transparency. How these concerns around token allocation and airdrop distribution are addressed will be pivotal in building a healthy and engaged ecosystem. Open communication and a genuine willingness to listen and adjust based on community feedback will be key for Zora’s long-term success.
How well the platform is able to attract and retain creators will likewise prove pivotal to the platform’s long-term growth. We’re excited about Zora’s powerful tools and their mission to help creators find and connect with their audiences. This strategy only further allows them to monetize their content and reinforces their position as a top social media player in the Web3 arena. The company's success in navigating these challenges will determine whether it can fulfill its vision of empowering creators and revolutionizing the way content is valued and distributed.
